Managing Operational Risk
First published:
ISBN: 9781782722861
If you are a Risk.net subscriber you are entitled to 20% off your Risk books purchases. Please email enquiries@riskbooks.com for more information.
As part of your Risk.net subscription you are entitled to 20% off all of your Risk Books purchases. If you would like to place an order please email enquiries@riskbooks.com
Regulatory Change: Part of a Perfect Storm
Introduction
Three Historical Spikes in Operational Risk Losses
First-Order Effects: Transforming Credit Defaults and Market Turmoil into Operational Risk Losses
Second-Order Effects: Transforming Rising Unemployment and Falling Interest Rates into Operational Risk Losses
Conclusions and Root Causes
Regulatory Change: Part of a Perfect Storm
Macroeconomic Threats: Tax, Rising Interest Rates and New Asset Bubbles
New Technology: Changing Business Models and Risk Profiles
Three Horsemen: Societal, Political and Environmental Change
Backtesting to the Mid-1990s and Conclusions
Defining and Cascading Operational Risk Appetites
Aligning Operational Risk Management Frameworks to Appetites
Estimating Exposures to Tail Events
Solutions for a Triumvirate of Seemingly Intractable Problems
Conclusions
“A PERFECT STORM” OF INCREASED REGULATION AND REVENUE AND COST PRESSURES
“If capital requirements have trebled and revenues are still where they were in 2006, the only answer is much more automation to take out costs and ruthless focus.”
a banking analyst in May 2014.11“Barclays moves to cut 7,000 jobs in retreat from investment banking”, Financial Times, May 8, 2014.
The return on equity of banks is clearly not what it was prior to the global financial crisis and banks are responding in a variety of strategies. By way of illustration of the seriousness, in December 2015 the Financial Times published research that showed that 11 large European and US banks had announced during 2015 almost 100,000 job cuts (excluding headcount reductions from disposals of businesses), representing more than 10% of their total workforces. This was not an aberration, as 2016 began with further waves of headcount reductions within investment banks.22“Thousands more bank jobs under threat in fresh round of lay-offs”, Financial Times, December 14, 2015. These headcount reductions are a symptom of a number of economic and regulatory factors that have combined into a near-perfect financial storm
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
